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NSE adds this tractor stock to F&O ban list for Wednesday

The tractor maker share price has seen a steep gap-down opening and finally shed 5.2 percent on Tuesday to close at Rs 1,633.45, with formation of high wave candlestick pattern on the daily charts with significantly high volumes.

August 03, 2022 / 07:03 AM IST
 
 
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The National Stock Exchange on August 2 decided to add Escorts Kubota to its futures & options (F&O) ban list for August 3 after the scrip crossed 95 percent of the market-wide position limit.

This is the first addition in the ban list in the August series that started off last Friday.

The tractor maker share price has seen a steep gap-down opening and finally shed 5.2 percent on Tuesday to close at Rs 1,633.45, with formation of high wave candlestick pattern on daily charts with significantly high volumes. In fact the stock has broken down the low of last large bullish candle formed on July 19. On the weekly scale, it has seen Evening Star kind of pattern formation, which is generally a trend reversal pattern.

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The sharp fall in Escorts comes after a dismal set of numbers for the quarter ended June 2022. Despite price hikes by the company, profit for the quarter fell 21 percent year-on-year to Rs 140.6 crore on higher input cost, but revenue from operations grew 19 percent to Rs 2,032 crore with tractor volumes growing 3.3 percent to 26,797 units.

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If derivative contracts in securities cross 95 percent of the market-wide position limit, they end up on the ban list, the NSE said.

“All clients/members shall trade in the derivative contracts of the said security only to decrease their positions through offsetting positions. Any increase in open positions shall attract appropriate penal and disciplinary action,” it said.

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During the ban, traders are not allowed to take fresh positions in stocks but can start reducing their positions. The F&O ban rule helps reduce speculation in stocks.

The market-wide position limit, which is set by stock exchanges, is the maximum number of outstanding open positions (buy and sell) in the F&O contracts of a security. If the open interest in a stock crosses 95 percent of the market-wide position limit, its F&O contracts enter the ban period.

Normal trading in a security resumes only after the aggregate open interest across exchanges comes down to 80 percent or below the market-wide position limit, the NSE said.
Sunil Shankar Matkar
first published: Aug 3, 2022 07:03 am
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